Despite the Florida hurricanes, and in the face of recently rising mortgage rates, unsold inventory of homes on the market climbed this week by about 1%. We’ve been expecting inventory to climb, and to tick up again next week before seasonal inventory declines start in November. The seasonal changes in the housing market are very different from what they used to be with inventory peaking two or three months later in the year.
If you’ve been paying attention, you know that the housing supply isn’t just the unsold inventory, it’s also a factor of new listings volume each week. Supply is how many homeowners want to sell, not just how many homes are available to buy. The signal that we watch for in the new listings count is whether there are too many sellers. All the bearish scenarios for home prices require more sellers each week. So far, in the post-pandemic years, we haven’t had a lot of sellers. Homeowners are staying put.
That’s true nationally, but here’s what we wanted to learn this week: Are there any local markets where sellers are rushing to the exits? We know that inventory is up in Phoenix and Dallas, but can we measure the investors who are panic selling or the homebuilders dumping inventory to get out?
Let’s take a look at the data here in the middle of October 2024.
Inventory expanded
Available inventory of unsold homes on the market expanded across the country this week by about 1%, or 7,000 single-family homes. That’s a healthy increase.
Last year, inventory rose by 1.5% in the same mid-October week, now the pace is 1% gains. There are 33% more homes on the market than a year ago. But, because inventory was rising so quickly in the fourth quarter last year, that gap is down from 40% increases in September. That’s why we’ve been tracking this change each week. Last year in the fourth quarter, buyers were running for the exits. It’s a very different market now. Every time mortgage rates rise, homebuyers have shown they’re willing to wait for conditions to return to their favor.
Interestingly, inventory is now only 21% fewer than in 2019. We use 2019 as a bit of an arbitrary baseline, because that was the last pre-pandemic year. In the fourth quarter of 2019, inventory was falling quickly. Mortgage rates had peaked and homebuying conditions were improving.
New listings up
There were just over 60,000 new listings unsold this week. That’s just 6% more than a year ago.
There were another 10,000 new listings with immediate sales, so overall that was 70,000 sellers this week, which is just 4% more sellers than a year ago. There are more sellers nationally, but just a little bit more. There are no signs in the national numbers of homeowners running for the exits. Last year, there were fewer sellers each week but demand was also weaker, so the unsold inventory was piling up faster.
The important thing to watch for with the new listings is when we transition from this era of very few sellers to one with a more historically normal level of sellers. There are 60,000 to 70,000 new listings each week now, when in the pre-pandemic times there would have been 80,000 sellers per week.
There is no evidence of seller supply increasing significantly. The trend has been slow incremental growth all year. There’s no sign of that trend changing.
New listings per metro
But I was curious. Are there any local markets where we can see homeowners, or investors, or builders running for the exits?
Austin has more inventory sitting on the market now than any time in the past decade. Is that inventory surging from sellers flooding the market? In fact, no. It turns out that Austin has 3% fewer new listings each week now than in 2019. A big shift in homebuyer demand drove Austin’s inventory up over the last two years, but because there still aren’t that many sellers, Austin’s inventory does not appear poised to grow much from here.
What about Tampa or Sarasota? Are sellers unloading after the hurricanes? It turns out, no, the opposite is happening. There are fewer sellers than normal, which makes sense given the devastation, but it is worth checking the data to verify. Maybe next year is the time for more sellers in Florida, but not yet.
Of the 100 biggest inventory metros around the country, 76% have fewer new listings each week now than they did in 2019. There are only a couple markets that stand out with a lot more sellers each week now — Spartanburg, South Carolina; McAllen, Texas, and maybe Huntsville, Alabama. Spartanburg has 53% more sellers now than in 2019. McAllen has 44% more, and Huntsville 29% more. All three of these are investor- and builder-heavy markets. They’re all small towns. Maybe there’s a nexus of builders, investors and slowed migration patterns in 2024 that led to that buildup?
The takeaway on the local new listings data is that most of the country is poised to have inventory decline if mortgage rates fall and stimulate demand. There are almost none with any signs of seller-led supply.
Pending home sales up
There were 60,000 single-family homes which took offers and went into contract this week across the country. That’s 9% more than last year and in fact 11% more sales contracts started than the same week in October 2022.
Overall, there are 358,000 single-family homes in contract. That’s 10% more than last year and 2% more than the same week in October 2022. This is the first time in two years that there are more homes in contract.
Again, this is not really about growth in home sales, just a tiny bit of growth. Rather, because the fourth quarters of 2022 and 2023 were so weak, the comparison is easy. We’re just very slowly adjusting to this new normal of higher mortgage rates. The current pending sales got a boost from lower mortgage rates last month, but those mortgage gains are gone now. This progress is just good enough to show some year-over-year gains and it may be fleeting. Though I expect in the fourth quarter you’ll see some headlines that say home sales are up over last year. The traditional data will start to pick up this transition.
These gains could be fleeting. Homebuyers are not afraid to walk away when money gets more expensive. Also, a lot of the big Florida markets are at a standstill and those are big enough to move the national numbers. While the recent trends are a little positive, the last few weeks have reversed any home sales momentum that might have been started.
Home prices unchanged
Home prices are largely unchanged this week. The median price of single-family homes going into contract was $389,000 again this week. Prices continue to hold up better than I expected early in the year and are about 5% greater than last year at this time.
The median price of all the homes in the U.S. right now is $439,900. That’s also unchanged from last week and is just 1% more than a year ago. Asking prices are 1% higher than a year ago, the contract prices are 5% above that same period. You can see the range for the year’s home price gains 1-5%, depending on how you measure home prices.
It’s wild how quickly the sentiment can change in a week. We thought we were at a transition point to get some home sales growth, and suddenly we had big mortgage rate spikes. We know that buyers can put the brakes on very quickly. As some point we may see sellers in some local markets getting antsy.
Mike Simonsen is the founder of Altos Research.
